Obama and His Economic Recovery Plan
Source: Kal’s Cartoons: The Economist
Obama has stated that he would introduce an economic recovery plan for the U.S. which would focus on relieving consumers of the impact of the credit crunch, and increasing job creation.
The House Democrats offered a $825 billion stimulus package to the legislature.
The money will be split up accordingly:
- $275 Billion in Tax Cuts
- $50 Billion towards Clean Energy
- $90 Billion towards Infrastructure
- $140 Billion towards Education and Modernizing Schools
- $27 Billion towards Unemployment Benefits
- $30.3 Billion towards Subsidizing Health Insurance Costs
As you can see, a lot of these expenses will create jobs. There will be double the output in Clean Energy. An increase in Infrastructure will create construction jobs. The Education will make it possible to hire more teachers, and construction in schools.
The rest will go towards more income for Americans which hopefully will boost spending, and help them pay off their mortgages.
On the subject of the T.A.R.P. (Troubled Assets Relief Plan), the Senate has voted in favour of Obama receiving the 2nd $350 Billion. Obama will use this the same as it was used by President Bush and Secretary Treasury Henry Paulson. It will be injected into financial institutions, and small businesses to increase loans to consumers. Consumer and business lending is down from next year regardless of the $350 Billion + already injected, but as the Quarterly results now coming out, the banks are going need more capital, and the government has to provide a solution. We have already seen what has happened from the collapse of Lehman Brothers, and nobody wants to see another plummet in the worldwide stock markets.
The Economy needs a bigger boost than that, and this plan doesn’t look to promising looking at everything that has happened. But if the countries around the world follow this principle, a lot of stimulus will be provided across the world, and that might be our hope. The U.S. can’t solve this problem on it’s own.
I know we’re in Canada, but we will see benefit from the U.S. recovering and I think that’s clear to all of us. The Canadian economy has been hit hard by the Mining, and Oil industry decline, which is directly linked to the U.S. economy, and over time we will see things get better as the U.S. gets better.
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